Precision engineering: Broad-reaching sector in resilient UK manufacturing industry

The precision engineering sector is a vital part of the UK’s manufacturing landscape, contributing significantly to various industries such as automotive, aerospace, medical devices and energy. The sector has over 2,000 businesses, is valued at approximately £8 billion, employs over 9,000 people (IBIS World), and the complex parts and components produced by these companies are used in a broad range of downstream industries.

The engineering and construction sector has generally seen a decline in deal activity since the highs of early 2021. However, our H2 2024 manufacturing and distribution report noted that the sector saw a slight uptick in deal activity, with precision engineering being one of the key subsectors.

Key trends in the sector

While we have seen an uptick in deal activity, the precision engineering sector faces multiple headwinds including:

Economic environment

The current economic climate has weighed on capital investment activity, which in turn impacts clients’ demand for plant and machinery produced by equipment manufacturers. Providers of maintenance and repair services, which account for almost 30% of revenue in the precision engineering sector (IBIS World) may benefit from extended investment cycles.

Impact of tariffs

Tariffs on steel and aluminium, which are key input materials in the sector, could significantly impact manufacturing costs. However, the UK government is aiming for 70% of all vehicles to be zero-emission by 2030. This is expected to drive investment in electric vehicle manufacturing and charging infrastructure thus benefitting precision engineering firms supplying to or involved in the automotive sector.

Recent deals and key acquirers in the sector

We have seen private equity involvement in the sector rebound from a low point in Q2 2023 to 30% of European precision engineering deals including private equity investment in Q1 2025 (Moore Kingston Smith Pitchbook research).

This includes Parklands Capital’s acquisition of a Nottingham-based fabrication business, Laser Expertise. Laser Expertise, founded by Anton Schwarz and Dr John Powell, employs over 80 people and operates from a facility with more than 30,000 square feet of workshop space.

Whilst private equity investment in the precision engineering sector has been growing, the majority of deals are from strategic acquirers seeking to enhance growth or acquire specialist capabilities. Two recent deals of note include:

1. Dean Engineering Limited

This well-established engineering company, known for its diverse capabilities in CAD design, CNC milling and turning, welding, fabrication and more, was acquired by East Kirkby Engineering Ltd. The acquisition will enhance East Kirkby’s strategic growth within the precision engineering sector.

2. Applied Automation (UK)

As mentioned earlier, Applied Automation (UK) acquired PTG Workholding, a firm specialising in expanding mandrels for component clamping. This acquisition was part of Applied Automation’s strategy to bolster its precision engineering offerings.

Key strategic acquirers in the sector include IMI plc, which has deployed over £400 million of capital for acquisitions since 2019. IMI plc also noted that they have a strong M&A pipeline across the US and Europe and are seeking bolt-on acquisitions to accelerate growth and expand their capabilities.

Outlook for the sector

Whilst there is a range of challenges facing UK precision engineering businesses, the sector is forecast to grow to £8.8 billion by 2030 (IBIS World). This will be driven by technological innovation, increasing sustainability efforts, including the zero-emission target for vehicles by 2030 and the ongoing demand for the high quality of output from UK-based providers.

If you are preparing your precision engineering business for the future, growing your operations, optimising your balance sheet or succession planning, speaking to an adviser is more important than ever.

Please contact Marc Fecher, Moore Kingston Smith’s Manufacturing Corporate Finance Partner.